- It is the new Cold War. The United States intelligence
agencies, facing downsizing after the fall of the Berlin wall, have found
themselves a new role spying on foreign firms to help American business
in global markets.
- Documents obtained by the Independent on Sunday reveal
how the CIA and National Security Agency (NSA) - propelled by the newly-elected
Clinton administration's policy of "aggressive advocacy" to support
American firms compete for overseas contracts - have immersed themselves
in the new hot trade war. Targets have included UK and European firms.
At stake are contracts worth billions of dollars.
- For America's spies an important tool has been the global
eavesdropping system known by the code name Echelon, which has come to
invoke the tag of the Big Brother of the cyberspace age.
- Echelon is part of a British and American-run world-wide
spy system that can "suck up" phone calls, faxes and e-mails
sent by satellite. America's intelligence agencies have been able to intercept
these vital private communications, often between foreign governments and
European businesses, to help the US win major contracts.
- The implications of eavesdropping business communications
are dramatic, according to Dr Brian Gladman, a British former top Nato
- "The analogy I use is where we were 250 years ago
with pirates on the high seas. Governments never admitted they sponsored
piracy, yet they all did behind the scenes. If we now look at cyberspace
we have state-sponsored information piracy. We can't have a global e-commerce
until governments like the US stop state-sponsored theft of commercial
information," he says.
- Britain's role in Echelon, via its ultra-secret eavesdropping
agency GCHQ, has put Tony Blair's government in the dock facing its European
- European politicians meet on Wednesday in Strasbourg
and Berlin to call for inquiries into electronic espionage by the US to
beat competitors. These debates follow two years of controversy about Echelon
as its astonishing power has gradually been revealed.
- But the real origin of the current row lies in the early
Nineties, when US politicians and intelligence chiefs decided that the
formidable but under-employed Cold War US intelligence apparatus should
be redirected against its allies' economies.
- At stake was not just routine international trade, but
new opportunities created by the demise of communism and fast-growing markets
in countries that US trade officials dubbed "BEMs" - Big Emerging
Markets, such as China, Brazil and Indonesia.
- Perhaps the most startling result of the new Clinton
policy came in January 1994, when the then French Prime Minister Edouard
Balladur flew to Riyadh to conclude a $6bn (£4bn) deal for arms,
airliners and maintenance, including sales of the European Airbus. He flew
- The Baltimore Sun later reported that "from a commercial
communications satellite, NSA lifted all the faxes and phone-calls between
the European consortium Airbus, the Saudi national airline and the Saudi
government. The agency found that Airbus agents were offering bribes to
a Saudi official. It passed the information to US officials pressing the
bid of Boeing Co."
- Clinton's government intervened with the Saudis and the
contract went to Boeing.
- A second contract where US intelligence played a decisive
role concerned Brazil. In 1994, NSA intercepted phone-calls between France's
Thomson-CSF and Brazil concerning SIVAM, a $1.4bn surveillance system for
the Amazon rain forest. The company was alleged to have bribed members
of the Brazilian government selection panel. The contract was awarded to
the US Raytheon Corporation - which announced afterwards that "the
Department of Commerce worked very hard in support of US industry on this
- This is just one of hundreds of "success" stories
openly boasted by the US Government's "Advocacy Center" up to
the present day. They do not say where the CIA or NSA was decisive in winning
the contract, but often brag of beating UK, European or Japanese competitors.
- Cases where the US "beat British" competitors
include power generation, engineering and telecommunications contracts
in the Philippines, Malawi, Peru, Tunisia and the Lebanon. In India, the
CIA tracked British competitive strategies in a competition to built a
700MW power station near Bombay. In January 1995, the $400m contract was
awarded to the US companies Enron, GE and Bechtel.
- Also in 1995, General Electric Power Systems won a $120m
tender to build a plant in Tunisia. "They beat intense competition
from French, German, Italian and British firms for the project," the
- Documents and information obtained by the IoS show that
the critical question of whether US intelligence should systematically
help business was resolved after the election of Clinton in 1993. He appointed
key Democratic National Party fund-raisers, including the late Secretary
of State for Commerce, Ron Brown, to senior posts and launched a policy
"to aggressively support US bidders in global competitions where advocacy
is in the national interest". Soon, every US government department,
from the Bureau of Mines to the CIA and the giant, super-secret National
Security Agency, was playing a role in landing contracts for the booming
- The new policy, dubbed "levelling the playing field"
by the Clinton administration, included arrangements for collecting, receiving
and handling secret intelligence to use to benefit US commerce.
- Three Sigint (signals intelligence) reports obtained
by the IoS are economic in nature. One details messages between Banque
Nationale de Paris offices in France and Delhi, concerned with loans to
build an atomic power station near Madras. A second gives details of OPEC
negotiations, including French diplomatic messages.
- A 1997 report details phone calls and faxes between Pakistani
officials in Islamabad and Beijing, and laments that the Chinese-based
official was told to send future messages by the diplomatic pouch. The
report warns that if this order was obeyed, it would "severely limit
our ability to monitor". All the reports are classified "TOP
SECRET UMBRA", indicating that highly-sensitive monitoring techniques
were used to get the information.
- The heart of the new, co-ordinated Clinton trade campaign
is the "Advocacy Center" inside the Department of Commerce. The
Center is run by the "Trade Promotion Co-ordinating Committee",
part of the US Department of Commerce. Declassified minutes of the Trade
Promotion Co-ordinating Committee from 1994 show that the CIA's role in
drumming up business for the US was not limited to looking for bribery,
or even lobbying by foreign governments. For a series of meetings dealing
with Indonesia, 16 officials were circulated with information. Five of
the officials were from the CIA. Three of the five worked inside the Commerce
Department itself, in a department called the "Office of Executive
Support". The fifth, Robert Beamer, was from CIA headquarters.
- The "Office of Executive Support" is, in reality,
a high-security office located inside the Commerce Department. It is staffed
by CIA officials with top-secret security clearances and equipped with
direct links from US intelligence agencies. Until recently, it was known,
more revealingly, as the "Office of Intelligence Liaison".
- According to Loch K Johnson, a staff member of the US
intelligence reform commission set up in 1993, officials at the departments
of Commerce, Treasury and State pass information to US companies without
revealing the intelligence source. "At Commerce, there's no code or
book to consult to say when and what information can be passed to a US
company," he says.
- If, for instance, a government official learned that
a foreign competitor was about to win a contract sought by a US company,
he explained, "someone in Commerce might call a US executive and say:
'Look, you might have a better shot at that contract if you sweetened your
bid a little,'" Johnson added. "They pass on the information.
But they usually do it in a very veiled fashion."
- In 1994, a report to the Congressional (house) intelligence
committee said that the "core of the intelligence community in this
area [industrial espionage] has focused on alerting US policymakers about
government-to-government lobbying efforts to disadvantage US firms seeking
international trade. "A review of intelligence reporting since 1986
has identified about 250 cases of aggressive lobbying by foreign governments
on behalf of their domestic industries that are competing against US firms
for business overseas", the report stated, adding that since the start
of the Clinton administration, 72 cases involving $30bn had been under
- In a March article for the Wall Street Journal, entitled
"Why we spy on our allies", former CIA director James Woolsey
claimed there was only one reason why the CIA tracked European companies.
"Most European technology just isn't worth our stealing." he
wrote. "We have spied on you because you bribe. Your companies' products
are often more costly, less technically advanced, or both, than your American
- Yet some of the earliest deals clinched by US "advocacy"
with CIA support are among the most corrupt deals of all time. In 1994,
President Clinton signed off on $40bn of business agreements between Indonesia
and US firms on one day. Among the deals was a $2.6bn power plant at Paiton,
Java. At the time the contract was signed, the US knew one of President
Suharto's daughters had been cut in on the deal, and was given a stake
in the project worth more than $150m.
- Two months ago, the directors of the CIA and NSA appeared
before the US Congress intelligence committee. CIA director George Tenet
told the Committee: "With respect to allegations of industrial espionage,
the notion that we collect intelligence to promote American business interests
is simply wrong. We do not target foreign companies to support American
- "If we did this, where would we draw the line? Which
companies would we help? Corporate giants? The little guy? All of them?
I think we quickly would get into a mess"
- Three years before European politicians had heard about
ECHELON, news of how the satellite spy system was gaining business for
the US was revealed in the US. A May 1995 report by NBC news said that
the US National Security Agency was intercepting business faxes and phone
calls from stations in the US, the UK and Hong Kong.
- Earlier this year, NBC published more revelations about
how US intelligence has been spying for business. For the original reports
see 'U.S. spying pays off for business', by Robert Windrem (14 April 2000)
and 'U.S. steps up commercial spying', by Robert Windrem (7 May 2000)
- Robert Windrem of NBC News contributed to this report.
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